Revenue commits to tackling rule breakers
HM Revenue and Customs reaffirmed its commitment to recoup tax from the 'rule breakers' as it released its latest set of tax gap figures.
The tax gap is the difference between the tax in theory that should be collected by HMRC and what actually is collected. At its formation in 2005 HMRC committed to reduce this gap and in 2010 the Government made £917 million available to HMRC to tackle the tax gap and raise additional revenues of £7 billion a year by 2014-15.
The latest figures show the tax gap for 2009-10 is estimated to be 7.9 per cent of liabilities, around £35 billion, and is slightly down from 2008-09, when it was 8.1 per cent of liabilities.
Exchequer Secretary, David Gauke MP, said: "Although these numbers show continued progress by HMRC in reducing the tax gap, there is no room for complacency. Just in the last few weeks we have challenged offshore tax evaders, closed tax avoidance loopholes and created a new HMRC unit to ensure that the wealthier members of society pay their way.
"We will continue to take action to prevent a minority of rule breakers dodging their responsibility to pay the right tax at the right time."
Criminal
The Chartered Institute of Taxation (CIOT) thought the new figures provided a useful contribution, using them to highlight the difference between tax avoidance and tax evasion.
Gary Ashford, who represents the CIOT on the Government's Compliance Reform Forum, said: "While some will challenge these figures, provided they are calculated on consistent bases, they are a useful contribution to the tax debate. The results suggest that recent Government initiatives are having an effect.
"According to the Government, tax evasion and other illegal activity are costing the Exchequer three times as much as tax avoidance. The CIOT has long argued that HMRC needs to put more effort into investigating and prosecuting those who seek to evade tax. We support recent announcements of additional resources in this direction."
Carelessness
The tax gap figures also show some £6 billion a year being lost to errors and carelessness by taxpayers, but the CIOT pointed out that it is not only the tax payer who can make mistakes.
Gary Ashford said: "Of course errors can go both ways. It is unclear whether these estimates take into account the amounts that some taxpayers will be overpaying by not taking advantage of reliefs and exemptions they are entitled to.
"It is not only taxpayers who make mistakes. As the recent Treasury Committee report illustrated, HMRC's own systems are prone to error and make the task faced by taxpayers needlessly difficult. If HMRC want to improve compliance and reduce error levels they also need to make it easier for people to contact them and get advice that is prompt, accurate and understandable."